tv Bloomberg Markets Americas Bloomberg February 2, 2018 12:00pm-12:31pm EST
that the fbi misconduct. president trump said that the fbi and justice department politicized what he called the sacred investigative process. prime minister theresa may is insisting the u.k. is not have to choose between frictionless trade with the european union and the ability to afford new trade deals around the world. shanghai,o the bbc in theresa may said i do not believe those are the alternatives. her conservative government is split between supporters of a clean break with the eu and those who want to stick close to the terror free single market and customs union here a dramatic moment in michigan sentencing hearing for larry nassar, the disgraced force dr. convicted of sexual assault. the father of three of his victims try to attack can on the stand -- attack him on the stand but were tackled by bayless.
-- bayless. the flu outbreak gripping the country are they showing no signs of slowing, the cdc says one out of every 14 visits to doctors and clinics last week were for flu symptoms, the highest level since the swine flu pandemic in 2009. therts sought -- thought season would be bad but its intensity has surprised health officials as the flu usually peaks in february. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery: welcome to bloomberg markets. breaking news, president trump has declassified the memo, the house memo which is now in congress.
what to do is up to congress according to president trump. vonnie: we should be able to , he said ityback has been declassified but congress -- let's listen in. president trump: i better not get involved. [laughter] vonnie: we did not hear it but he said that "it has been declassified but congress will decide what to do with it. i think it is terrible, a disgrace." he said that a lot of people should be ashamed of themselves. congress will decide what to do with the declassified memo. congress is at the -- half of congress is that the gop retreat. julie hyman is with us halfway into the trading day. why is the selloff gaining steam?
breaking these to big streak we have seen without a 3% pullback in the s&p 500. it has been nearly three years since we saw that kind of a cold back from a peak to a trough -- pullback from a peak to a traveler the s&p down 500 -- s&p 500 down. part is because of the bond market, the stronger than estimated job market and wage growth going up a little bit. we thought the 2.8% handle on that is theyield, highest it has been since january of 2014. that is putting pressure on stocks as our disappointing earnings. to put it in perspective, look at the bloomberg, we talked about the margin by which the s&p 500 has been trading above its various moving averages, indicators of momentum. we have the spread between the s&p 500 and its 200 day moving average. it is still at around 10%.
a breaking of the huge upward trend we have seen in stocks. but a reflection on more caution and trepidation, more questions about the integrity of the rally we have seen for so long. some of it has to do with earnings with apple shares trading lower. the company's revenue forecast disappointing some investors. alphabet is lower after they talk about unexpected costs. visa is taking a hit. they are talking about an increasing in operating expenses for the full year. it showed slower revenue growth than its competitor, mastercard feared -- mastercard. these are the biggest drags on the s&p 500. we are watching it going -- we are watching bitcoin. it is bouncing today but still
down 18% on the week. as we watch these swings and cryptocurrencies, which perhaps are a proxy for risk in the market. look at the bloomberg. we have seen bitcoin in overbought territory at its extremes in late december. if you look at the relative strength index, and now getting close to over-sold territory. a rapid decline as of late. it is going back and forth, interesting to look at the various measures of momentum. vonnie: thank you for that. let's get back to president donald trump for the comments on the memo. trump: thank you very much, everybody. i better not get into that. [laughter] vonnie: once again, that was
president trump swatting away questions about the memo. the gop is at a strategy session in green briar. the president said before that that the memo has been declassified but congress would decide what to do with it. we were anticipating a release today. james comey has been tweaking -- tweeting. the president says i think it is terrible, a disgrace, the memos assertions and a lot of people should be ashamed of themselves. let's get back to stocks and the economy. offy: u.s. stocks falling in better than expected jobs report and the 10 year yield topping 2.8% for the first time since 2014. the u.s. economy added 200,000 jobs and wages rose the most since the recession. the strength and the labor market reinforces the fed plan to raise rates three times this year. here with more is j.p. morgan
securities chief u.s. economist, michael feroli. is the phillips curve making a comeback? toit is too early to jump that, i believe in the phillips curve but wage data can be noisy month-to-month. there was interesting back revisions to wages and december and november and the trend looks like it has been pretty steadily but slowly accelerating since 2015. wages are picking up we think. vonnie: any signs they will? >> will pick up? vonnie: yes. >> we saw in the past couple of months. i think there is more evidence that the tight labor markets are starting to gain traction with wage growth. shery: does it worry you that the numbers are affected by a shorter workweek? >> they may be related because the weather around the reference week, colder than normal with
some storms which may have held down hours but also pushed up average hourly earnings. they may have been distorted by the weather and that is why you do not want to jump too much on one month but we have seen the trend picking up over the past couple of months. vonnie: labor force participation come a good thing for inflation if it is stagnant? >> we think demographic factors should be pushing it down and this reflects the cyclical strength in the labor market, the fact it is stable. the label market may be pulling in more people than we would have otherwise expected, given how strong job growth is and wages are picking up. stable in this world is a good thing. shery: that will translate to a march fed rate hike. >> we feel confident that will happen. we thought the statement earlier this week was a little bit hawkish, pointing in that direction and we think march -- not a done deal but close to a done deal. hikes.ally look at four
the fed is looking at three. come the march meeting, i do not know if they revise it, or later in the year. we do not see a lot in this economy that will slow the fed from hiking once per quarter. vonnie: the third rate hike in september, the odds have moved up in the last 24 hours. by 20. -- plenty. is the move in treasury yields will assist? >> yes, we think yields will move a little bit higher the course of the year. in part because of what the fed action. in we do not think the move is enough to derail the housing market or the economy more generally. something we will watch. shery: action. we saw the 30 year fixed mortgage rate rising this week to the highest and 10 months. how could higher rates affect sentiment? consumer sentiment is strong,
will it restrain further spending? >> we think the rise in rates reflect the sentiment and strength in the economy. so far, we have not seen any wobble and homebuyer demand. -- in homebuyer demand. just this week, mortgage versus up --ations picked mortgage purchase applications picked up. no reduced enthusiasm for homebuying. vonnie: how concerned are up yo, you do not think about stocks a has gone up and come down, what is causing the wobbles in the market? >> as a macro economist, i think where we are now is where we were in the middle of january. , think about the wealth effect i do not want to get too wound up about a few days or even a few weeks, when we think about how financial variables will affect macroeconomy. when we step back, financial
conditions are pretty easy, whether stocks, interest rates, the dollar. vonnie: will it pick up steam and turn into something more serious? because then you would have to think about it. >> we are not there yet. minornk stocks, this is a correction and we do not look for something much worse. if we are wrong, we will have to reassess and think about it in context of the economy. right now, as a macro economist i step back and look at monthly and quarterly. still looking like financial condition supporting a trend growth. shery: says did not mention -- whenolicy, what could we see fx of the tax-cut so the fed will say something about it? >> i think the fed wants to stay away from talking about fiscal policy because they want to stay out of the eyes of congress and keep a low profile when it comes to politics and taxes and spending. arguably, you are are leasing the benefit of the tax cuts,
terms of consumer sentiment and is the sentiment. -- business intimate. some may be -- business sentiment. some may be in the data. we will watch it and pay attention to what happens with the budget negotiations next week. we think there is some underappreciated potential for government spending to increase, along with the reduction of taxes. vonnie: gary: was on earlier espousing the infrastructure deal and he maintains it will happen, not having this year while? -- not happening this year? >> if we do get the deal points lifts the budget caps, the numbers are enough to move the needle on the macroeconomy. forecasting -- forecasting in washington is hotter than the numbers but if we do get the deal along the lines of probably of what they are talking about, it matters with economy. youy: michael feroli, thank
♪ this is bloomberg markets. i am shery ahn. vonnie: i am vonnie quinn. tech companies with results and amazon is shining. apple can't investor concern with results showing solid demand for its iphone x. took as jeff bezos victory lap as years of investment and robots, gadgets, paid off, their most profitable quarter ever. for more analysis that -- let's
bring in cory johnson in new york. it was a really interesting quarter for apple. at what point can i steal someone's idea and pretend it was mine? after i say it a few times? an insight i will now claim as mine, someone said, i said thomas sorry, this is -- i said, sorry, this is the moment where there is a passing of the baton from the passing of leadership from one of the most important devices in technology to the alexa. the iphone losing importance and leadership to the success of the alexa and sales of the amazon and go. -- amazon echo. computing has gone from what you are doing on your phone to voice.
apple should have owned it and does not with amazon way out ahead. tremendous success in alexa and you saw the results from amazon yesterday. really? i do not having -- like having to talk to my device. >> some people who do not anchor really? show who do not talk all day. this is a fantastic success and driving the sales throughout the amazon platform. apple wants to get into services and not just cell phones. a big growth in services by 2020. amazon is already there and using the hardware trojan horse, the alexa devices, on your next year -- in your bathroom or kitchen, and using it to drive sales of all kinds of services, amazon prime video, driving sales of -- vonnie: it will not replace the iphone. is that line of thinking
profitable? >> it is driving revenue through the amazon business model. it is not driven towards earnings-per-share but rather to be successful in operations and growing their business. it is working. shery: the iphone x did pretty well, people were willing to pay $999. >> the quarter apple reported was good but the guidance was not as good. a lot of it because the price of the iphone. the average selling price is jacked up because of that, the iphone x. a chart that demonstrates how it has bumped around at a high 600 rate and in the last quarter, $796, the average selling price for all of the phones they sold in the quarter. that is the effect of the iphone x and why the numbers were so good. asle looks at their phone their trojan horse for people to use their services.
app for the iphone was somebody else's, uber and others , they may be success of the iphone, particularly instagram, but the profits went to somebody else. profits from the alexa is going to amazon. it is a different approach. know, i willot have to dispute some of the things i said. >> if you do not like them, that was got galloway. vonnie: house gop has released the disputed memo on the handling of the donald trump wrote. house gop has released the memo on the donald trump probe. a few minutes ago, we had president trump saying it would be up to congress, the memo was declassified and he was making the decision -- leaving the decision to congress as to whether or not to release it.
♪ vonnie: this is bloomberg markets. i am vonnie quinn. shery: i am shery ahn. vonnie: let's get back to the breaking news, the memo is up with the house gop releasing the disputed memo on the handling of the donald trump probe. president trump gave his approval and said the house would decide. congress would decide. let's get to what we know and our congressional reporter. we have been waiting for this. we heard it would be friday. the president talked about it.
where do we stand? >> the whole talk of the memo has taken on a life of its own, particularly in conservative media and pro donald trump suggesting,ave been based on leaks from its author, exposesnes, that it some level of bias among investigators. in the pressure probe, against president trump. one thing coming out in the memo as it has just been released, an indication that the steel dossier written by a british intelligence operative, the first real document we had to suggest that russia was trying to meddle in the united states election, and potentially help president trump win. -- memo suggests that bit that was a key to the investigators pursuing fisa
warrants to surveillance carter page. the president and the sound you just played suggested that it exposes bias and in his words, a lot of people should be ashamed. the question is -- what else does the memo revealed and what actions president trump will take as a result? he is deeply frustrated with the russian investigation and very often is expressing anger about it. he believes it cast doubt over the legitimacy of his election and it has cast a shadow over his presidency. a lot of questions remain to be answered. the big question is -- how the white house and his allies will react and what it means for the russian investigation? shery: and what it means for the fbi, could we see resignations? they have been objecting to this release. >> we do not know resignations
are coming. they have been speculated. the fbi put out an extraordinary release, it does not usually comment on things like these, but it did, saying it had grave concerns with the idea of releasing the memo. they said it was incomplete and misleading. the justice department has objected to it. they believe it will harm national security, if it comes out. there has been a process to include summered actions so sources and methods are not compromised. it is guaranteed to spark a firestorm. vonnie: that is where i was going, what is redacted? and how much is redacted, and who redacted it? >> not clear, it has been a process between the house intelligence committee run by a republican, and an ally of president trump name devin nunes. there has been a process between him and the white house to work
on the reductions and to figure out -- reductions to figure out what should be in there. key to the politics is that the memo is one-party in one committee in one chamber of congress releasing it by themselves over the ejections of democrats -- over the objections of democrats to say it is made investigators, that it has no merit. shery: we will have to leave it there. continue toill monitor headlines on the memo and be on standby to bring you those coming up. back to the market, bloomberg real yield is next. this is bloomberg. ♪
30 minutes dedicated to fixed income, this is bloomberg real yields. ♪ >> coming up, the job report has climbed since 2009 and has helped sink treasury and bonds break 3%, and after showing signs of resiliency, credits begins to crack. we begin with the big issue, the u.s. jobs report. >> this is a solid report. >> we think it is